Affiliated Foods Midwest Cooperative, Inc. v. SuperValu Inc.
ORDER that the Motion to Strike Plaintiff's Jury Demand in the Lead Case (Filing No. 37 ) is granted. Member Cases: 8:16-cv-00466-JFB-FG3, 8:16-cv-00465-JFB-FG3 Ordered by Magistrate Judge F.A. Gossett. (LAC)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
AFFILIATED FOODS MIDWEST
COOPERATIVE, INC., a Nebraska
corporation, and ASSOCIATED
WHOLESALE GROCERS, INC.,
SUPERVALU INC., a Delaware
BOROWIAK IGA FOODLINER, INC., )
AFFILIATED FOODS MIDWEST
COOPERATIVE, INC., and
Third Party Defendant.
This matter comes before the Court on the Motion to Strike Plaintiff’s Jury Demand in
the Lead Case (Filing No. 37) filed by the Lead Case defendants, Affiliated Foods Midwest
Cooperative, Inc. (“AFM”) and Associated Wholesale Grocers (“AWG”). AFM/AWG argue
that the Lead Case plaintiff, Borowiak IGA Foodliner, Inc. (“Borowiak”), waived its right to a
jury trial in pre-litigation written agreements with AFM. The Court will grant the motion.
Borowiak is a grocery store chain currently operating seven local supermarkets in
southern Illinois. (Filing No. 1 at p. 2). On December 29, 2015, Borowiak and AFM entered
into a Supply Agreement in which AFM agreed to supply Borowiak with foodstuffs and other
items sold to retail grocers. (Filing No. 38-1). On the same date, in connection with the
Supply Agreement, Borowiak executed a Promissory Note (Filing No. 38-3) and a Security
Agreement (Filing No. 38-2) in favor of AFM. Trevor Borowiak, President of Borowiak IGA,
executed a Guaranty of the Note (Filing No. 44 at p. 35) and a Guaranty of the Supply
Agreement (Filing No. 44 at p. 58).
Section 7(j) of the Supply Agreement, designated “Governing Law: Venue: Waiver of
Jury Trial,” contains the following provision in all capital letters:
EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY ACTIONS OR LIABILITIES ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT.
(Filing No. 38-1 at p. 5).
The Security Agreement contains the following provision, in all capital letters:
WAIVER OF JURY TRIAL. DEBTOR AND SECURED PARTY
HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, SUIT, COUNTERCLAIM, CROSSCLAIM OR
OTHERWISE, WHETHER IN CONTRACT, TORT OR OTHERWISE,
RELATING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT
OR ANY ACTS OR OMISSIONS OF SECURED PARTY AND ITS
OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL
BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY
DEBTOR AND SECURED PARTY AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH
ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD
OTHERWISE ACCRUE. DEBTOR AND SECURED PARTY ARE
EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS
SECTION 7(K) IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER.
(Filing No. 38-2 at pp. 5-6).
The Promissory Note contains the following provision:
TRIAL BY JURY. BORROWER AND LENDER HEREBY WAIVE,
TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, SUIT,
COUNTERCLAIM, CROSSCLAIM OR OTHERWISE, WHETHER IN
CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR
INDIRECTLY TO THIS PROMISSORY NOTE OR ANY ACTS OR
OMISSIONS OF LENDER AND ITS OFFICERS, DIRECTORS,
EMPLOYEES OR AGENTS IN CONNECTION THEREWITH. THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY BORROWER AND LENDER AND IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. BORROWER AND
LENDER ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF
THIS SECTION 10 IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER.
(Filing No. 38-3 at pp. 3-4).
Both Guaranties likewise contain jury waiver provisions in all capital letters. (Filing
No. 44 at pp. 35, 58).
Borowiak alleges AFM failed to fulfill its obligations under the Supply Agreement, and
filed the instant action against AFM on October 12, 2016, for breach of contract, breach of the
covenant of good faith and fair dealing, and for violations of the Nebraska Consumer
Protection Act (“NCPA”). (Filing No. 1). AFM filed a Counterclaim against Borowiak,
alleging Borowiak defaulted under the Supply Agreement and Promissory Note, and filed a
Third Party Complaint against Trevor Borowiak for breach of the Guaranties, among other
causes of action. (Filing No. 44).
Borowiak demanded a jury trial in its Complaint. AFM/AWG filed the instant motion
to strike Borowiak’s demand for jury trial, arguing that Borowiak waived its right to a jury trial
in each of the above agreements executed between the parties. (Filing No. 37).
The right to a jury trial is guaranteed in certain civil cases under the Seventh
Amendment of the United States Constitution. “Although the jury-trial right can be waived,
the right is fundamental,” and courts must “indulge every reasonable presumption against its
waiver.” Bank of Am., N.A. v. JB Hanna, LLC, 766 F.3d 841, 849 (8th Cir. 2014) (quotation
marks and citation omitted). Nevertheless, an express waiver of the right to a jury trial may
occur by contract. See Northwest Airlines, Inc., 373 F.2d at 142; Cooperative Fin. Ass’n, Inc.
v. Garst, 871 F.Supp. 1168, 1171 (N.D. Iowa 1995).
Borowiak argues that Nebraska state law1 governs the contractual jury waivers in this
case, under which it argues the clauses would be “null and void.” (Filing No. 45 at pp. 8-11).
It is true that “federal courts have not reached a consensus on whether state or federal law
governs the enforcement of a pre-dispute contractual jury waiver.” 9 Charles A. Wright &
Arthur R. Miller, Fed. Prac. & Proc. Civ. § 2303 (3d ed.). However, the Eighth Circuit Court
of Appeals has repeatedly stated that “the right to a jury trial in the federal courts is to be
determined as a matter of federal law in diversity as well as other actions.” InCompass IT, Inc.
v. XO Commc’ns Servs., Inc., 719 F.3d 891, 896 (8th Cir. 2013) (quoting Simler v. Conner, 372
U.S. 221, 222 (1963)); see also, Kampa v. White Consol. Indus., Inc., 115 F.3d 585, 587 (8th
Cir. 1997) (“The right to a jury trial in federal court is clearly a question of federal law.”).
Neb. Rev. Stat. § 25-1126 provides, “The trial by jury may be waived by the parties in actions arising on contract, and with
assent of the court in other actions (1) by the consent of the party appearing, when the other party fails to appear at the trial
by himself or attorney; (2) by written consent, in person or by attorney, filed with the clerk; and (3) by oral consent in open
court entered on the journal.” Borowiak argues none of the three subsections are present in this action.
Therefore, the Court finds that in this Circuit federal law governs the contractual jury waiver
clauses at issue.
Courts in the Eighth Circuit apply the federal “knowing and voluntary” test to determine
whether a jury trial has been waived. The court considers several factors in determining
whether a pre-litigation waiver of a jury trial was knowingly and voluntarily executed,
including: whether the provision is in a standardized document; the size of the print of the
provision; the placement of the provision in the document; whether the parties had the
opportunity to negotiate the terms; whether the waiving party was a sophisticated business
person; whether the parties were in an unequal bargaining position; and whether there was an
opportunity to review the terms of the contract. DAB, Inc. v. Sunbelt Rentals, Inc., No.
7:16CV5004, 2017 WL 280692, at *4 (D. Neb. Jan. 20, 2017) (citing Garst, 871 F.Supp. at
1172 (citations omitted)).
In this case, the Supply Agreement, Promissory Note, and Security Agreement each
contain explicit and unambiguous waivers of the right to a jury trial. The agreements are not
long documents and the jury waiver provisions are set forth in a separate paragraph near the end
of each agreement. The majority of the text in each agreement is typed in a regular font, with
only certain provisions typed in all capital letters, including the waiver provisions. The parties
are sophisticated businesses and the contracts at issue concern large volume purchases for $85
million over a five year term. Borowiak did not appear to be in an unequal bargaining
position, as it alleges in its Complaint that these agreements were executed after AFM solicited
Borowiak to switch from its previous supplier of twenty years to AFM as a new supplier. The
waivers in the Promissory Note and the Security Agreement both authorize each party to the
agreement to file a copy of the jury waiver section “as conclusive evidence of this waiver,”
which AFM has done in this case. (Filing No. 38-3 at pp. 3-4; Filing No. 38-2 at pp. 5-6).
Borowiak does not seriously dispute AFM’s contention that Borowiak knowingly and
voluntarily executed the waivers in the agreements; rather, Borowiak argues enforcement of
the clauses are procedurally unenforceable. In consideration of the above, the Court finds
Borowiak knowingly and voluntarily executed waivers of a jury trial on its claims in this case.
Borowiak argues that even if the jury waiver clauses are enforceable, AFM waived its
right to enforce the contractual clauses because AFM itself demanded a jury trial in its
Amended Answer (Filing No. 44). “A party may waive a written contract in whole or in part,
either directly or inferentially,” but “to establish a waiver of a legal right, there must be a clear,
unequivocal, and decisive act of a party showing such a purpose, or acts amounting to an
estoppel on his or her part.” D & S Realty, Inc. v. Markel Ins. Co., 789 N.W.2d 1, 17 (Neb.
2010); see CBR Funding, LLC v. Jones, 2015 WL 5431969, at *2 (W.D. Tenn. Sept. 15, 2015)
(finding a party must engage “in a clear, unequivocal, and decisive act” demonstrating intent to
waive its right to enforce a contractual jury waiver provision).
The Court finds that AFM did not clearly, unequivocally, and decisively waive its right
to enforce the valid contractual waivers of a jury trial in this matter. It is clear that AFM
intended at the outset of this litigation to enforce the jury waiver clauses. The parties’ Rule
26(f) Report filed in February 2017 noted the parties’ disagreement as to whether a trial by jury
was available in this case, and agreed to a deadline for a party to file a motion to strike the
demand for jury trial. (Filing No. 29 at pp. 38-39). AFM filed its motion to strike by the
agreed-upon deadline. Although AFM’s Amended Answer added a demand for jury trial, this
Amended Answer was filed after it filed the instant motion to strike, which AFM asserts was a
contingency plan in case its motion to strike is not granted. AFM agrees to proceed without a
jury if its motion to strike is granted.2 (Filing No. 47 at p. 7).
The Court finds AFM’s
conduct does not amount to a clear, unequivocal, and decisive waiver of the valid contractual
jury waivers. Cf. Sprint Nextel Corp, 2017 WL 119583, at *2 (denying plaintiff’s request to
withdraw its proper jury demand after litigating for five years); Sapp v. Propeller Co. LLC, 784
N.Y.S.2d 532 (App. Div. 2004) (finding defendants waived contractual jury waiver clause by
affirmatively demanding a jury trial and then failing to seek to withdraw the demand until nine
months later). Accordingly,
The Court notes that the jury waiver clauses apply equally to AFM as a party to the agreements at issue. Regardless,
AFM/AWG has agreed to proceed without a jury, which obviates Borowiak’s remaining argument regarding two
IT IS ORDERED: The Motion to Strike Plaintiff’s Jury Demand in the Lead Case
(Filing No. 37) is granted.
DATED: May 30, 2017.
BY THE COURT:
s/ F.A. Gossett
United States Magistrate Judge
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